Book Review

Economics and Ethics in Health Care

No Benefit: Crisis in America's Health Insurance Industry

Curing the Crisis: Options for America's Health Care

N Engl J Med 1993; 328:1359-1360May 6, 1993

Article

No Benefit: Crisis in America's Health Insurance Industry
By Lawrence D. Weiss. 156 pp. Boulder, Colo., Westview Press, 1992. $26.95. ISBN: 0-8133-1215-9

Curing the Crisis: Options for America's Health Care
By Michael D. Reagan. 196 pp. Boulder, Colo., Westview Press, 1992. $49.95 (cloth); $15.95 (paper). ISBN: 0-8133-8179-7

Given the high priority assigned to health care reform in the recent presidential and congressional elections, one would expect to see a growing market for books dealing with the pros and cons of various reform proposals. Into this category fall the two books reviewed here, which offer substantially different perspectives on changes needed in the American health care system.

Lawrence Weiss' No Benefit: Crisis in America's Health Insurance Industry is best described as a diatribe against the health insurance industry. To Weiss, who is a medical sociologist at the University of Alaska at Anchorage, “the private health insurance industry is the keystone of the bizarre and dysfunctional health care edifice now burdening the American people.” Weiss sees the health insurance industry as uninterested in medical cost control because higher premiums ultimately translate into greater profits. He believes the use of medical underwriting effectively institutionalizes racism and sexism. Considering health care as nothing more than a commodity in today's insurance system, he claims that the social price for retaining private insurance is overtreatment of the insured and undertreatment or neglect of the uninsured. To Weiss, the way to achieve health care reform is to create a national health system that eliminates the role of private health insurance.

Weiss' book adds little to the current health care debate because of its unidimensional view of the necessary reforms. Entire areas of the health reform debate are overlooked, including the managed competition approach first espoused by Alain Enthoven of Stanford University in the 1970s. The only reference to Enthoven in the book is a description of him as a “sympathetic speaker at the 1990 annual meeting of the Health Insurance Association of America.”

In effect, Weiss dismisses reform proposals that preserve a role for private insurance. Unfortunately, he never describes his own vision of a national system. There is no discussion of how benefits should be structured, how the program should be financed and administered, and how cost containment would be achieved. There is no discussion of how health care would be delivered at the local level. For example, Weiss does not state explicitly whether private insurers should operate as fiscal intermediaries for the national system, as in the current Medicare programs, or whether their role should be totally eliminated. He does not state whether health professionals should become salaried civil servants or whether they should operate under a fee schedule or capitation. Presumably, there will not be any room for “managed care” (in the form of health maintenance organizations and preferred provider organizations), since Weiss sees these arrangements as creating obstacles to care under the guise of cost containment. Although Weiss does refer favorably to several proposals for the national health system, including those advocated by Congressman Ron Dellums (D-Calif.), the American College of Physicians, the Physician Forum, and the Physicians for a National Health Program, the details of these plans are so sketchy that the reader is unable to formulate an opinion as to whether they are indeed workable.

Michael Reagan's Curing the Crisis: Options for America's Health Care not only is more objective than Weiss' book but also offers more detailed and up-to-date analyses of the various reform proposals. Reagan, who is a professor emeritus of political science at the University of California at Riverside, provides a conceptual framework for understanding the reform proposals based on the level of government involvement. He specifies five broad approaches to reform: national health insurance (as in Britain and Canada), universal health insurance (as in Germany and in play-or-pay or managed competition proposals), the employer mandate, health insurance reform, and the privatized, individual approach (as espoused by the conservative Heritage Foundation).

Reagan also discusses various strategies for controlling health care costs, which he categorizes as falling under either an economic or a medical label. Under the economic label, he briefly looks at cost shifting, cost sharing, compensation controls, managed care, and managed competition. Like Weiss, Reagan looks unfavorably on managed care; however, his argument centers on the fact that he sees the economic incentives under managed care as vehicles for cost shifting and as yielding no real leverage over system-wide costs. He then examines methods of making the practice of medicine more effective. Here he reviews such approaches as technology assessment, practice guidelines, the use of alternative delivery systems, regionalization of health services, and the use of “physician extenders.” Reagan ultimately favors medical approaches over economic ones, which he sees as emphasizing cost shifting and cost cutting and as having little effect on non-price competition (as when providers compete on the basis of the newest and best technology).

Unlike Weiss, Reagan favors retaining a pluralistic insurance system, with employers continuing to serve as the primary purchasers of health benefits. In Reagan's mind, the best approach to reform is the middle-of-the-road play-or-pay approach, in which employers are given the choice of maintaining their own health plans or of paying a payroll tax and having employees receive benefits through a publicly administered insurance pool. He also supports global budgeting at the state or national level to prevent the proliferation of unnecessary facilities and services.

Reagan is a realist who understands the give and take of the political process. Although I personally might argue with some of his analyses, particularly his views on economic incentives and his critique of managed competition as an “oxymoronic concept,” the book does give the reader a sense of what reforms are politically feasible. Overall, the book is a well-presented, thought-provoking introduction to the whole topic of health reform. Using a minimum of economic and health care jargon, it provides the reader with insight into a broad array of issues that need to be addressed as President Bill Clinton and the Congress reformulate national health policy.

Joan B. Trauner, Ph.D.
Coopers & Lybrand, San Francisco, CA 94105